Most commercial software is available for end users with a license agreement. In the license agreement between the proprietor of the software (the “licensor”) and the end user or organization (the “licensee”), the licensor gives permission to the licensee to use the software under certain limitations, which are set forth in the license agreement.
Some server products require that all clients that connect to the server applications have a license to connect to and use the services of that software. Some server products require one license per concurrent connection, whereby one license is required for each unique client connection at any point in time. On the other side, some server products require a license for each unique client regardless of how many will be connecting at any single point in time.
Usually, server software includes a small number of licenses, and this allows the software to be used by a few clients. If more connections to the server are needed, then additional licenses must be purchased.
Some licenses are electronically enforced. The server refuses to service clients if there are not enough licenses to cover them all. The server does not service clients unless there are valid licenses installed, and the server authenticates and serves the number of valid clients licensed. Once that number is met, the server may accept a small number of additional connections and then warn administrators before refusing to serve further connections until additional licenses are installed.
Then, in order to ensure correct number of licenses have been purchased to legally have all clients being served by a server, some licenses are assigned to end users. The Client Access License (CAL) of Microsoft Corporation is such a well known license which legally permits client computers to connect to Microsoft server software.
In large business organizations, there is the need to maintain auditable records of license assignments. Failure to do so may result in lawsuits and penalties from licensors.